Programming

The
“Livermore Market Key”

By KH Tang
 96 *(1+2*ThresholdPercent)

100 *(1+2*ThresholdPercent)
Error with Simple Multiplication 120 120
method when calculating the Up and
Down Pivot Point. 115.2

96
100 100

120 *(1-2*ThresholdPercent)

Solution to handle the error: => UpTrendThreshold Calculation

=>
DownTrend*(1+2*ThresholdPercent)

DownTrendThreshold Calculation
=>
UpTrend/(1+2*ThresholdPercent)
 Jesse Livermore Secret Market Key Flow Chart by KH Tang

Program Start

False First Bar

?

True

Initialization

StateNo False StateNo False StateNo False StateNo False StateNo False
=1? =2? =3? =4? =5?

True True True True True

Process Process Process Process Process Process

StateNo 1 StateNo 2 StateNo 3 StateNo 4 StateNo 5 StateNo 6
Routine Routine Routine Routine Routine Routine
UpTrend NatlRally SecRally SecReact NatlReact DnTrend

Conditional Reset of
NatRallyReset Flag
and
NatReactReset Flag Note: Short form used in the flow chart
PP = PivotPoint
Nat = Natural
Sec = Secondary
End Dn = Down
React = Reaction
 Conditional Reset
Initialization
Parameters

StateNo=1;
InUpTrend AND
InUpTrend=True; False NatReact <
InDnTrend=False;
{UpTrend/
(1+2*ThresholdPct)}
UpTrend=C;
?
NatRally=C;
SecRally=C;
True
SecReact=C;
NatReact=C;
DnTrend=C;
NatReactReset=True
NatRallyReset=True;
NatReactReset=True

UpTrendPP=C;
NatRallyPP=C;
NatReactPP=C;
DnTrendPP=C;
InDnTrend AND
False NatRally >
{DnTrend*
(1+2*ThresholdPct)}
?
End
True

NatRallyReset=True

End
 Process StateNo 1
(InUpTrend)

True Price >= False

LastPrice
?

False
Price > (InDnTrend AND
UpTrend Price <DnTrendPP)
? False
OR
InUpTrend AND
True Price < {UpTrend/
(1+2*ThresholdPct)}
?
Price <
(UpTrend/ False
True
(1 +ThresholdPct)
?

True

False
NatReactReset OR
Price<NatReactPP
? True

True

State No=1 (InUpTrend) State No = 6 (InDnTrend) StateNo= 5 (InNatReact) StateNo = 4 (InSecReact)

InUpTrend=True InDnTrend = True NatReactReset=False SecReact = Price
InDnTrend=False InUpTrend = False NatReact= Price UpTrendPP = UpTrend
UpTrend=Price DnTrend = Price UpTrendPP = UpTrend
UpTrendPP = UpTrend

End
 Process StateNo 2
(InNatRally)

True Price >= False

LastPrice
?

(InUpTrend AND (InDnTrend AND

Price >UpTrendPP Price <DnTrendPP)
False False
OR OR
InUDnTrend AND InUpTrend AND
Price>DnTrend* Price < {UpTrend/
(1+2*ThresholdPct)} (1+2*ThresholdPct)}
? ?
Price <
False Price > (NatRally/ False
True True
NatRally (1 +ThresholdPct)
? ?

True True

NatReactReset OR False
Price<NatReactPP
? True

True

StateNo = 2 (InNatRally)
NatRally = Price
State No=1 (InUpTrend) State No = 6 (InDnTrend)
InUpTrend=True InDnTrend = True
InDnTrend=False InUpTrend = False
UpTrend=Price DnTrend = Price
NatRallyPP = NatRally
StateNo= 5 (InNatReact) StateNo = 4 (InSecReact)
NatReactReset=False SecReact = Price
NatReact= Price NatRallyPP = NatRally
NatRallyPP = NatRally

End
 Process StateNo 3
(InSecRally)

True Price >= False

LastPrice
?

(InUpTrend AND (InDnTrend AND

Price >UpTrendPP Price <DnTrendPP)
False False
OR OR
InUDnTrend AND InUpTrend AND
Price>DnTrend* Price < {UpTrend/
(1+2*ThresholdPct)} (1+2*ThresholdPct)}
? ?

Price <
False Price > True True SecRally/ False
NatRally (1+ThresholdPct)
? ?

True True

False Price > Price < False

SecRally NatReactPP
? ?

True True

StateNo = 3 (InSecRally) StateNo = 2 (InNatRally) State No = 1 (InUpTrend) State No = 6 (InDnTrend) StateNo = 5 (InNatReact) StateNo = 4 (InSecReact)
SecRally = Price NatRally = Price InUpTrend = True InDnTrend = True NatReact = Price SecReact = Price
InDnTrend = False InUpTrend = False
UpTrend = Price DnTrend = Price

End
 Process StateNo 4
(InSecReact)

True Price >= False

LastPrice
?

(InUpTrend AND (InDnTrend AND

Price >UpTrendPP Price <DnTrendPP)
False False
OR OR
InUDnTrend AND InUpTrend AND
Price>DnTrend* Price < {UpTrend/
(1+2*ThresholdPct)} (1+2*ThresholdPct)}
? ?

Price >
False SecReact* True True Price < False
(1+ThresholdPct) NatReact
? ?

True True

False Price > Price < False

NatRallyPP SecReact
? ?

True True

StateNo = 3 (InSecRally) StateNo = 2 (InNatRally) State No = 1 (InUpTrend) State No = 6 (InDnTrend) StateNo = 5 (InNatReact) StateNo = 4 (InSecReact)
SecRally = Price NatRally = Price InUpTrend = True InDnTrend = True NatReact = Price SecReact = Price
InDnTrend = False InUpTrend = False
UpTrend = Price DnTrend = Price

End
 Process StateNo 5
(InNatReact)

True Price >= False

LastPrice
?

(InUpTrend AND (InDnTrend AND

Price >UpTrendPP Price <DnTrendPP)
False False
OR OR
InUDnTrend AND InUpTrend AND
Price>DnTrend* Price < {UpTrend/
(1+2*ThresholdPct)} (1+2*ThresholdPct)}
? ?

False Price >

NatReact* Price < False
True True
(1+ThresholdPct) NatReact
? ?

True True

False NatRallyReset OR
Price>NatRallyPP
?

True

StateNo = 3 (InSecRally) StateNo = 2 (InNatRally)
SecRally = Price NatRallyReset = False
NatReactPP = NatReact NatRally = Price
NatReactPP = NatReact
State No = 1 (InUpTrend) State No = 6 (InDnTrend) StateNo= 5 (InNatReact)
InUpTrend = True InDnTrend = False NatReact = Price
InDnTrend = False InUpTrend = True
UpTrend = Price DnTrend = Price
NatReactPP = NatReact

End
 Process StateNo 6
(InDnTrend)

True Price >= False

LastPrice
?

(InUpTrend AND Price < False

Price >UpTrendPP DownTrend
False
OR ?
InUDnTrend AND
Price>DnTrend*
(1+2*ThresholdPct)} True
?

False Price >

{DnTrend* True
(1+ThresholdPct)}
?

True

False NatRallyReset OR
Price>NatRallyPP
?

True

StateNo = 3 (InSecRally) StateNo = 2 (InNatRally) State No = 1 (InUpTrend) State No = 6 (InDnTrend)

SecRally = Price NatRallyReset = False InUpTrend = True InDnTrend = True
DnTrendPP = DnTrend NatRally = Price InDnTrend = False InUpTrend = False
DnTrendPP = DnTrend UpTrend = Price DnTrend = Price
DnTrendPP = DnTrend

End
Sample Chart
In late 1939, Livermore's son, Jesse Jr., suggested
to his father that he write a book about his
experiences and techniques in trading in the stock
and commodity markets. The book was
completed and published in March 1940. It was
titled How To Trade In Stocks. ( Downloadable)
In this short book, Jesse Livermore spent a great
deal of effort, more than 1/3 of the book, in
explaining and illustrating this “Livermore Market
Key” technique in details. Later in November
1940, he passed away…
May be… just may be that… Who Knows?
May be he wanted to pass down this tool to the
public to avoid personal financial crash due to the
Stock Market Manipulation in the future? As it
surely would help those who believe and follow
through his work. (See it for yourself from the
charts on the next link.)
The above flow-charts were proven to be
programmable as the result shown in my blog:
Stock Market Tools (6) - Livermore Market Key.
"La guerre! C’est une chose trop grave pour la
confier à des militaires."
"War is too important to be left to the
generals."
- Georges Clemenceau (1841-1929): A French
journalist, physician and statesman. He served
as Prime Minister from 1906 to 1909 and from
1917 to 1920.
With the same token, it is suggested that:-
Personal Finance matter is Too Important to be
left to the Financial Advisors!
Thus, it is so serious that individual Must spend
part of the time to learn and understand how
economy works!
Bless You
KH Tang
24 Jan 2010